The controversial striker has already given notice on his rented house in Cheshire and also flown a number of belongings back to Milan ahead of a potential return to San Siro.

And the Italian was spotted with a number of close friends at Chinese restaurant Wings in Manchester on Saturday night in what an eye-witness told Goal.com "looked very much like the final goodbye".

He continued: "Mario often dines there but he wasn't his usual jocular self, certainly the mood seemed a sombre one, as if he was on his way."

Milan have proposed a £25m transfer with payments over six years to sign the 22-year-old, who has scored just one Premier League goal in 14 appearances this season.

City director of football Txiki Begiristain and manager Roberto Mancini are both understood to be ready to sell Balotelli following a string of controversies surrounding the former Inter star, who cost £24m when he moved to the Etihad Stadium in 2010.

The champions are in no rush to sell Balotelli in the winter transfer window but are aware that the player is homesick in the north west and eager to return to Italy following the birth of his first child last month.

Milan are expected to intensify their efforts to sign Balotelli after conceding defeat in their attempts to re-sign Kaka from Real Madrid.

"The negotiations for Kaka have broken down. It's not possible to complete the deal for fiscal reasons,” said Adriano Galliani, the Milan vice-president. “We had agreed on everything else but the deal broke down about an hour ago."

Balotelli’s agent, Mino Raiola, has been vocal in insisting that there his ‘zero chance’ of his client leaving City this month while Milan officials including Galliani and coach Massimilliano Allegri have played down their interest in the Italy international.

"There is no negotiation for Balotelli with any club, no meeting, zero. It seems like a Grimm Brothers' fairy tale," Raiola said this week.

"Manchester City won't sell Mario, let alone loan. There are zero chances he moves. But until January 31st, who knows."

Goal.com understands, however, that talks have taken place although City are holding out for a better deal with payments structured over three years.

Balotelli has been frustrated with a lack of opportunities this season having found himself behind Sergio Aguero, Carlos Tevez and Edin Dzeko in the pecking order at the club.

Throughout his time at City, he has been involved in a number of controversial incidents including a highly publicised training ground bust-up with Mancini earlier this month.